Further debunking myths about high-density housing, a new study reveals a certain type of affordable housing has little if any negative impact on surrounding home values. To the contrary, under some conditions, affordable housing can give general home values a boost.

"Low Income Housing Tax Credit Housing Developments And Property Values" a study commissioned by the Wisconsin Housing and Economic Development Authority (WHEDA) found no evidence that Section 42 developments in the city of Madison and Waukesha and Ozaukee counties had a negative impact on property values.

In Milwaukee County there was a small negative impact on appreciation rates, but the study attributed that impact to a concentration of Section 42 developments, according to WHEDA, a source of creative financing that works to preserve affordable housing and other economic niches in Wisconsin.

Conducted by The Center for Urban Land Economics Research at the University of Wisconsin in Madison, the study looked at every home in the Milwaukee metropolitan area that sold twice between 1995 and March 2001, including in Waukesha, Washington, Ozaukee and Milwaukee counties. It also looked at homes in Madison that sold twice between 1990 and March 2001.

The repeat sales of more than 6,000 homes overall gave the group an overall appreciation index with which to compare against appreciation of homes near Section 42 properties.

Section 42 properties for low- to moderate-income households are constructed, rehabilitated or acquired with funds from The Low Income Housing Tax Credit originated in conjunction with the Tax Reform Act of 1986. Section 42 offers developers a 10-year income tax break in return for reserving a bank of "affordable" units for modest-income households. About 26,000 apartments have been built in Wisconsin using the program.

"To this point, our results for Wisconsin are generally consistent with results in other studies: we have not been able to find evidence that Section 42 developments cause property values to deteriorate. The exception is Milwaukee County, where properties that are distant from the developments seem to appreciate more rapidly, although the magnitude of the effect is small," the study found.

"We have found no evidence of an impact in Waukesha and Ozaukee, and find evidence that properties in Madison near Section 42 developments appreciate more rapidly. In our view, the key policy implication of our results is that Section 42 developments are best placed in relatively affluent communities, where there is no evidence that that developments cause property values to deteriorate. This phenomenon is consistent with findings from past literature," according to the team from the University of Wisconsin-Madison's Department of Real Estate and Urban Land Economics that conducted the study -- professor Richard K. Green and associate professor Stephen Malpezzi (who is also an associate member of the Department of urban and Regional Planning), who are also both Wangard Faculty Scholars and Ph.D. student Kiat-Ying Seah.

Earlier this year the Urban Land Institute (ULI), in cooperation with the National Multi-Housing Council (NMHC) and the American Institute of Architects (AIA), convened a ULI/ NMHC/AIA Joint Forum on Housing Density to help dispel some myths and change perspectives about high-density development. Using existing examples, the forum found high-density housing can be a success when it is transit-oriented, coupled with neighborhood preservation, includes retail and other mixed-uses and is laden with features important to those likely to live in such communities -- singles, empty nesters and students among others.

Published: August 14, 2002

Use of this article without permission is a violation of federal copyright laws.

Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.